Singapore office market recovery well underway: Colliers
Colliers suggests occupiers take early action on future office choices, as the marketplace shifts in favour of property owners. Landlords of workplace properties with obsolete specs must consider repurposing or redeveloping their properties, to future-proof them.
An office study by Colliers for 1Q2022 shows that the recovery momentum in the Singapore workplace market is well in progress. Premium and Grade-An office rentals in the CBD increased for a third successive quarter in 1Q2022, raising 1.5% q-o-q to reach $10.26 psf, sustained by healthy and balanced leasing demand. This notes the fastest pace of growth considering that rentals rebounded in 3Q2021.
At the same time, on the investment front, ordinary funding values in the segment raised 5.6% q-o-q in 1Q2022, striking $2,850 psf. Similarly, net returns pressed by 0.1% q-o-q to 3.4%, with cap rates can be found in between 3% and also 3.6% in the last quarter.
On the back of tight returns and also interest rate unpredictabilities, capitalists are suggested to focus on energetic property control or improvement to achieve return targets.
Moving forward, Colliers anticipates workplace possessions in prime areas to continue bring in a vast array of funding, underpinned by a healthy and balanced leasing market outlook, limited new supply, and the reopening of Singapore’s borders.
In terms of the CBD micro-markets tracked by Colliers, office buildings in the Raffles Place/New Downtown area, along with the Shenton Way/Tanjong Pagar area, saw the highest growth in rentals, boosting 2.3% q-o-q to reach $11.96 psf.
The healthy and balanced leasing need for the CBD premium and also Grade-An office section is backed by corporates’ choice for newer office complex with high-grade requirements, in preparation for employees going back to the office as well as the anticipated pick-up in service activity.
Leasing deals during 1Q2022 included fashion seller Shein occupying 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical company BASF will certainly be transferring from its existing premises at Suntec Tower 1 to the upcoming Guoco Midtown.
The segment is expected to continue expanding in the coming months, sustained by a broad-based economic improvement and return-to-office momentum. Colliers anticipates rents for CBD premium as well as Grade-An offices to expand by 4% to 5% in 2022.
Premium and Grade-An office buildings in the CBD also remained to see strong renting demand, with positive net absorption of around 134,000 sq ft in 1Q2022. On the other hand, the job price tightened to 3.3%.
